The SFC has reportedly been in discussions with ETF issuers on how to provide staking services through authorized platforms.
According to a report published by Bloomberg, Hong Kong's financial regulator is considering allowing ETH ETF issuers to stake Ether and earn passive income. Earlier this year, Hong Kong approved a Bitcoin ETF more than three months after the United States approved 10 spot ETFs.
The SFC has reportedly discussed the possibility of providing staking services via authorized platforms with the country's crypto ETF issuers, after receiving proposals in recent weeks.
The financial regulator is currently only discussing the issue and there is no set timeline for implementation, according to Bloomberg.
The maneuver undertaken by the SFC contrasts with the policy adopted by the United States Securities and Exchange Commission (SEC). The SEC considers staking services to be an investment contract and a violation of securities laws.
This has been evident from the recent changes made by major financial institutions calling for the ETH spot ETF. For example, Fidelity removed staking from its latest S1 deposit.
Cryptocurrency staking as a service allows proof-of-reserve stakeholders to lock up their tokens for a set period of time.
In exchange for staking, traders earn a percentage of the staked tokens as a reward. There are numerous third-party staking services that allow users to stake their own tokens.
Last year, the US SEC deemed staking services to be a form of security, forcing the Kraken exchange to cease its staking services in the US.
Coinbase, however, is contesting the SEC on the subject of staking, publishing a "Petition for Rulemaking" on March 20 in which it explains that core staking does not constitute a security as it does not involve an investment of money and the opportunity cost of staking does not represent an investment.
In 2024, Hong Kong has emerged as a growing hub for cryptocurrency service providers, thanks to several regulations in favor of the instruments.
Furthermore, it was the first country to approve a spot ETF on ETH, before the United States. However, response has been lukewarm following its launch last month. However, the decision to allow staking could bring a new flow of investment into the country's ETFs.
